We wouldn't blame Brazilian Rare Earths Limited (ASX:BRE) shareholders if they were a little worried about the fact that Bernardo Sanchez da Veiga, the MD, CEO & Executive Director recently netted about AU$25m selling shares at an average price of AU$4.00. That's a big disposal, and it decreased their holding size by 33%, which is notable but not too bad.
Notably, that recent sale by Bernardo Sanchez da Veiga is the biggest insider sale of Brazilian Rare Earths shares that we've seen in the last year. That means that even when the share price was slightly below the current price of AU$4.05, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 33% of Bernardo Sanchez da Veiga's holding.
In the last year Brazilian Rare Earths insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
View our latest analysis for Brazilian Rare Earths
I will like Brazilian Rare Earths better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Brazilian Rare Earths insiders own 27% of the company, worth about AU$296m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
Insiders haven't bought Brazilian Rare Earths stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 4 warning signs for Brazilian Rare Earths (2 shouldn't be ignored) you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.